Volkswagen Emissions Scandal

The Volkswagen emissions scandal, widely known as "Dieselgate," unfolded in 2015 when it
was revealed that Volkswagen, a major global automaker, had installed software in their
diesel-engine cars designed to manipulate emissions tests. Despite marketing their diesel
vehicles as "clean diesel" and compliant with stringent environmental standards, an
International Council on Clean Transportation (ICCT) study in 2014 exposed significantly
higher real-world nitrogen oxide (NOx) emissions from VW cars compared to laboratory
tests. This essay explores the intricacies of the case, unraveling the ethical lapses that led to
the scandal, the attempted cover-up, and the ensuing repercussions.
At the beginning of the 21st century, VW had become one of the largest companies in the
world, emphasizing responsible business practices, particularly concerning the environment,
employees, and society. However, the company's attempt to champion responsible business
was overshadowed by the revelation that they had manipulated the software of 11 million
cars worldwide, cheating U.S. government regulations. This deliberate deception led to the
resignation of Martin Winterkorn and the arrest of Rupert Stadler, along with a staggering
financial cost of at least $25 billion and a 50% drop in share prices.
The roots of the deception by Volkswagen can be traced back to 2008 when, in response to
tightening emission standards, the company presented redesigned diesel cars to U.S.
regulators. However, the vehicle was equipped with defeat devices that manipulated
emissions during tests, producing pollutants at levels 40 times the legal limit when driven on
real roads. Under commercial pressures, the company's engineers resorted to deceptive
practices, compromising ethical standards.
The scandal came to light in 2014 when environmental campaigners conducted a cross-
country test, revealing significant discrepancies in emissions. This led to a U.S.
Environmental Protection Agency (EPA) investigation, prompting a denial from VW, which
attributed the issue to a minor software error.
The cover-up that ensued involved false data, a bogus recall, and the destruction of
incriminating documents. Only in 2015 did VW admit to intentional deception, exposing a
systemic failure in ethical decision-making. Plea bargains and investigations disclosed that
the conspiracy likely began in 2006, with executives sanctioning defeat devices in millions of
cars. The cover-up extended from engineers to top-level management, implicating even the
CEO, Martin Winterkorn. Subsequent arrests, indictments, and pleas underscored the
extensive deception within the company.
The company's initial denial of any wrongdoing and the attribution of the issue to a minor
software error persisted until August 2015 when VW finally came clean, admitting to
intentional deception. This admission was driven by the fear of not receiving certification for
their 2016 diesel models. Further investigations and plea deals in 2017 revealed that the
conspiracy likely started as early as 2006, with managers ignoring pleas from workers.
Winterkorn was found to have known about the conspiracy, as evidenced by a memo sent out
by engineers.
The scandal prompted many countries to enact environmental protection acts between 1992
and 1999, reflecting the global impact of VW's unethical actions. The fallout from Dieselgate
exposed a larger conspiracy involving senior figures within the company and extensive
attempts to cover up the wrongdoing. The cover-up operation involved VW executives and
engineers feeding regulators false and misleading data, issuing a bogus recall, and even
destroying documents.
Despite facing severe consequences, VW successfully rebounded and even surpassed BMW
in stock value. Nevertheless, this incident has ignited inquiries into the enduring ethical
practices within the automotive industry, catalyzing a paradigm shift towards electric
vehicles. The Volkswagen emissions scandal stands as a stark reminder, underscoring the
paramount importance of regulatory scrutiny, ethical corporate behaviour, and transparency in
upholding trust and credibility within the business landscape.
Amidst the colossal financial and reputational damage, VW remarkably managed to recover,
prompting critical reflections on the persistent ethical standards within the automotive sector.
The repercussions, both economically and environmentally, exceeded initial estimates,
highlighting the profound societal impact of corporate deception. Furthermore, the scandal
has cast a shadow over the industry's culture, implicating other major automakers in
subsequent revelations of fraudulent practices.
Utilitarianism, despite its flexibility, highlights the contradiction between Volkswagen's
profit-driven motives and the ethical imperative to maximize the overall good for all
stakeholders. The company's focus on shareholder value without considering the broader
consequences, such as lost jobs, pay cuts, stock devaluation, damaged corporate reputation,
and environmental pollution, directly contradicts Utilitarian principles.
In the Utilitarian perspective, businesses are expected to exert a utility value in their
corporate policies, yet Volkswagen's actions failed to align with the greater good for the
greatest number of people. The short-term utility gained from fraudulent activities did not
lead to greater overall good, as evidenced by the negative impacts on various stakeholders.
The awareness created about corporate fraud could be seen as a potential positive outcome,
but it doesn't outweigh the extensive harm caused by Volkswagen's actions.
Moreover, Act Utilitarianism deems Volkswagen's actions unacceptable, as they did not
maximize the greater good. The cheating created short-term utility for the company, but the
overall harm once exposed far outweighed any initial gains. Civil and criminal lawsuits filed
against Volkswagen are viewed as a deserved punishment under Act Utilitarianism, aiming to
deter not only the company but also other automakers from engaging in future ethical
violations.
Analysing Volkswagen's decision-making using Rest's four-stage model exposes a notable
deficiency in moral intensity, particularly evident in the prioritization of short-term gains over
the ethical imperative of producing environmentally responsible vehicles. The company's
actions suggest a critical deviation in the second stage of Rest's model, where moral judgment
is applied. Despite being fully aware of the moral necessity to come clean about the
emissions cheating, Volkswagen opted for a cover-up, indicating a profound lapse in ethical
leadership and decision-making at the highest levels of the organization.
Several contextual factors contributed to the absence of whistleblowing within the
organization. A culture of conformity, fuelled by the fear of reprisals and a sense of loyalty to
the company, likely deterred employees from exposing the wrongdoing. The lack of clear
reporting channels, coupled with industry norms that may have normalized fraudulent
practices, created an environment where silence prevailed over ethical responsibility.
The senior management at Volkswagen demonstrated a significant failure in handling the
scandal. The delayed acknowledgment of the issue, followed by the resignation of key
executives, reflected a deeper failure in crisis management. The reactive response, focused on
settling legal matters and paying fines, did little to mitigate the damage to the company's
reputation. This reactive approach suggests a failure to fully comprehend the gravity of the
situation and reveals deficiencies in crisis leadership.
The delayed confession exacerbated the fallout, leading to increased distrust among
stakeholders and further damaging Volkswagen's credibility. An earlier admission of
fraudulent activities could have significantly reduced the negative impact on the firm, but the
decision to conceal information prolonged and intensified the crisis.
To enhance its approach to ethics management, Volkswagen should consider implementing a
series of measures. These may include establishing transparent reporting channels to
encourage internal reporting, providing comprehensive ethics training for managers to install
ethical decision-making practices, and ensuring robust whistleblower protection to encourage
the reporting of unethical behaviour without fear of reprisals. The adoption of Rest's four-
stage model of ethical decision-making could serve as a guide, steering the company towards
ethical behaviour and principled leadership.
Claims of a rapid cultural change at Volkswagen may face skepticism. Rebuilding trust and
instigating a genuine cultural shift requires sustained efforts over time. While the company
can take immediate steps to rectify its image, true transformation will depend on consistently
adhering to ethical practices, fostering transparency, and ensuring accountability. The scars
left by the Dieselgate scandal will necessitate a prolonged commitment to ethical conduct for
Volkswagen to rebuild its standing in the eyes of consumers and the broader public. This
journey toward redemption involves not only addressing immediate concerns but also
cultivating a culture that prioritizes ethics and integrity at every level of the organization.
In conclusion, the Volkswagen emissions scandal serves as a cautionary tale, underscoring the
far-reaching consequences of ethical lapses within corporate decision-making. It emphasizes
the critical need for moral intensity, adherence to ethical models, and a steadfast commitment
to fostering a culture of transparency and accountability within organizations. Only through
sustained efforts can VW hope to emerge from the shadows cast by Diesel Gate and regain
the trust of its stakeholders.
THANK YOU!

https://www.bbc.com/news/business-34324772
https://www.forbes.com/sites/margooge/2022/12/05/from-emissions-cheater-to-climate-
leader-vws-journey-from-dieselgate-to-embracing-e-mobility/?sh=796db9412265
https://ethicsunwrapped.utexas.edu/video/volkswagens-emissions-evasion